1 Consider the purchase of a can of soda at a convenience store.

Describe the
various stages in the supply chain and the different flows involved.

When a customer purchases a can of soda at a convenience store, his purchase

represents the end of a supply chain’s delivery of an item and the beginning of
information regarding his purchase flowing in the opposite direction.
The supply chain stages include customers, retailers, wholesalers/distributors,
manufacturers, and component/raw material suppliers. A customer’s purchase moves
product towards the customer and dollars and information towards the retailer.

The retailer places an order from the wholesaler/distributor to replenish stock, thereby
moving information back up the supply chain while moving product down the supply
chain. As the order is filled, the retailer will move dollars back up the supply chain.

The wholesaler/distributor transmits information and dollars to the manufacturer who

produces product and ships it down the supply chain to the wholesaler.
Finally (or initially, depending on your perspective) the manufacturer moves orders
(information) and dollars towards suppliers in exchange for material flow into their
production processes.

2 Why should a firm like Dell take into account total supply chain profitability
when making decisions?

Dell realizes that their ultimate success lies with the success of their supply chain and
its ability to generate supply chain surplus. If Dell was to view supply chain
operations as a zero sum game, they would lose their competitive edge as their
suppliers’ businesses struggled. Dell’s profit gained at the expense of their supply
chain partners would be short lived. Just as a physical chain is only as strong as its
weakest link, the supply chain can be successful only if all members cooperate and
focus on a global optimum rather than many local optima.